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NewsMaterial2 min readDisconfirmAI Editorial

Transaction Structurer Steven Kopits: Iran’s Goal at Hormuz Is to Tax, Not Blockade; Gulf Oil Producers Face Pressure to Increase Output

Transaction structurer Steven Kopits argues that Iran’s strategy regarding the Strait of Hormuz is to tax trade rather than disrupt it, drawing an analogy to medieval Rhine robber barons. He projects this approach would compress netbacks for Gulf oil producers to $40–50 per barrel, forcing them to increase production to maintain living standards and effectively turning Iran into an 'OPEC of One.' From a transaction structuring perspective, he considers the technical difficulty of negotiations low; the real obstacles lie in Iran’s relationships with Hezbollah and Hamas and the conditions Israel will ultimately accept.

2026-11-03 10:36 GMT+8

Transaction structurer Steven Kopits offered a specific assessment on Econbrowser regarding Iran’s strategy at the Strait of Hormuz: Iran’s objective is not to block trade but to tax it. He drew an analogy to the 'robber barons' of the medieval Rhine—those who built castles one after another along the river, all sustained by tolls. Kopits believes Iran has signaled that it wants to 'take the money and leave,' rather than create shipping disruptions.

If this assessment holds, it alters the production incentive structure for Gulf oil producers. Kopits projects that Iran may compress the netbacks for Gulf producers to $40–50 per barrel. At this level, profit per barrel is insufficient to sustain the accustomed standard of living in Gulf states, compelling them to increase output to offset the decline in unit revenue. Kopits notes this is not a new pattern—there are historical precedents of OPEC producers increasing output during periods of low oil prices. He suggests Iran could become an 'OPEC of One,' influencing the market by controlling tolls rather than production volumes.

Kopits specifically referenced an open letter recently published by the Islamic Revolutionary Guard Corps (IRGC). He views the letter as coming from 'the institution with the greatest stake in the existing system'; its length and sincerity suggest that internal Iranian leadership understands a structural contradiction: it is impossible to simultaneously be a feared power and a toll-collecting landlord. In his view, this opens a window for reform in Tehran—the Iranians themselves recognize that the current system is outdated and decaying, similar to how Eastern European communist leadership viewed its own systems in the late 1980s.

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From a transaction structuring perspective, Kopits argues that the negotiations are not technically difficult. He states that if one has experience designing structures for public offerings, private equity, and venture capital, this counts as a moderately challenging project: funds are ample, parties have incentives to participate, and there exists a framework all can agree to and abide by. The true difficulties are limited to two issues: Iran’s relationship with Hezbollah and Hamas, and the conditions Israel will ultimately accept. Everything else is a matter of valuation and structuring.

It should be noted that Kopits’ assumptions regarding netbacks and his 'OPEC of One' judgment are personal projections, lacking corroboration from official Iranian policy documents. His transaction structuring analogy also presupposes that all parties act as rational economic agents, whereas security fears and ideological commitments in geopolitics often do not follow such logic. Furthermore, his assessment of Iran’s nuclear program—that it is unclear whether nuclear weapons constitute a net benefit for Iran—is likewise an analytical inference rather than a confirmed policy shift.

Sources

  • econbrowser.com↗
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